The U.S. Trade Gap with China Continues to Widen. Travel Trade Is a Rare Bright Spot

The U.S. Census Bureau announced this week that the U.S. merchandise trade deficit with China hit an all-time high through April, topping out at more than $119 billion for the first four months of the year.

The U.S. imported more than $160 billion worth of goods between January and April, while exporting only $42 billion in that same timeframe: the U.S. bought approximately 3.8 times the amount of goods from China as China bought from the U.S.

This has, unfortunately, been the trend for decades: the U.S. most recently enjoyed a merchandise trade surplus with China in 1986. In other words, the last time the U.S. had a merchandise trade surplus with China, the megacity of Shanghai had less than seven million inhabitants—a fraction of the more than 23.5 million people who now call the city home.

While the news of a record merchandise trade deficit with China is disheartening, one industry more than held its own in chipping away at that colossal gap: travel. In 2017, the U.S. had a travel trade surplus of $27.5 billion with China. 

The contributions the travel industry makes toward lowering the overall trade deficit with China are significant. While the U.S. still had an overall deficit of $334 billion with China, that number would have been eight percent higher without the trade surplus provided by travel.

It is crucial that the U.S capitalize on the travel trade surplus it already enjoys with China, and work to expand that market. With nearly eight percent of all overseas visitors to the U.S. in 2016 arriving from China, it is the third-largest source market for all overseas visitation to the U.S.—a significant jump from being the 22nd-largest source market in 2000. Additionally, Chinese visitors were the third-biggest spenders in 2016, spending an average of nearly $7,000 when visiting the U.S. The China market is still expanding, and has even more room to grow.

To capitalize, the U.S. must do all that it can to ensure that visitation from China to the U.S. is as efficient and hassle-free as possible. Primarily, that means streamlining the visa process for legitimate business and leisure travelers, and continuing to reduce wait times in the Customs entry process. By focusing on growing our share of this rapidly expanding market, the travel industry could be key in slashing the ever-growing trade deficit with China.